May 27 - Joylyn Quintana spent the last 1- 1/2 years saving money for a down payment, but when she finally went house hunting, she was dismayed at her lack of buying power.

"I think I do pretty well financially, but I was surprised," she said.

Quintana, 30, is buying a $122,500 condo instead.

Lots of first-time buyers - and even move-up buyers - in the Denver metro housing market have Quintana's sticker shock. Single-family homes in the six-county area now average a record $232,863, according to a report released Friday.

That's up 11 percent from a year ago. Even the median price - the midpoint between the low and high prices and a more accurate depiction of the market - rose 12.4 percent to $189,900 in the past year, according to Perry & Butler Realty Inc., a Denver brokerage firm that has followed the resales market since 1985. The figures do not include sales of new homes.

Condos and townhomes also set a record in May: Condos sold for an average of $148,255, up a whopping 23 percent from $120,946 in May 1999. The median reached $125,000 - an increase of 19 percent over last year.

The increase in prices, not the number of homes sold, has pushed up the dollar volume of sales, Jurschak said.

Two hundred fewer homes sold in the first five months of this year compared to the same period a year ago, but sales are still up $400 million in the period, he said.

Any relief in sight?
Not likely. Interest rates on fixed mortgages - at 8.5 percent Friday - could reach 9 percent in the next six months, making the cost of money even more expensive for buyers, predicted DeWayne Perry of D.W. Perry Corp., a mortgage lender in Denver.

And many real-estate experts believe higher rates will do little to bring down home prices.

"They're still selling quickly if they're priced correctly," she said.

But some see the market slowing somewhat.

"It has definitely cooled it off,"
Perry said. "We have 30-year conventional mortgage rates approaching 9 percent. That's quite an increase over where they were a year ago."

Rates, which were at 7.375 percent a year ago, haven't been a de terrent, according to Jack O'Connor, president of Prestige Real Estate Group. He sees sales activity slipping for a different reason.

"The number of people buying has slowed down because the aver age price has risen," O'Connor said. "The average price is starting to exceed a person's ability to afford it."

At 8.5 percent, interest rates are still low compared to where they've been historically, O'Connor said. "That's still a reasonable interest rate for home mortgages."

Plus, Jurschak said, people have turned to adjustable rate mortgages. In October 1998, when mortgage rates reached a low of 6.5 percent, ARMs accounted for 7 percent of all mortgage activity, Jurschak said.

Now they account for 29 percent of all mortgages, he said.

Interest rates could have contributed to the 6.2 percent decline in properties under contract during May compared to the same month a year ago - 3,640 homes compared with 3,881 in May 1999.

But 4,357 homes closed in May - the second best May on record since Perry & Butler first began tracking the market. A record 4,378 homes closed in May 1999.

She's biting the bullet so she can build equity and eventually get into a larger home, she said. A fixedrate mortgage also will allow her to hold onto the property longer and rent it once she has bought her move-up home, she said.

"I'm not going to be able to buy the house I would like, but it makes sense to make an investment in something I'll be able to keep on a long-term basis," Quintana said.

She couldn't wait any longer, she said.

Building equity
"Prices are so high, and really, if you don't build the equity in some form, it makes it even more difficult for you to buy a house someday," said Quintana, who has educated herself about the market through the Internet and lenders. "If you think well, "I want to save money to buy the house I want to live in,' you're not going to be able to save at the pace prices are appreciating."

Denver's red-hot market has kept inventory low, but it began creeping up in May, partly because of the time of year, Trumbull said. This weekend is the beginning of the feverish home-buying and selling season, she said.

The number of unsold homes on the market was 9,612 in May, up 7.9 percent from 8,906 homes for May a year ago.

"While inventory's up, we still have a shortage," said Norm Waugh, broker-owner of Metro Brokers/Norman Waugh & Co. "First-time homebuyers are really having a problem."

But has the market reached its peak?
Waugh doubts it. On a recent trip to San Diego, he noticed a plain, 914-square-foot home in a nice neighborhood selling for $525,000 - $574 a square foot. The home doesn't have a view and isn't on the ocean.

"In the literature, they describe this as a starter home," said Waugh with a laugh. "I don't think we're anywhere close to the top - if the economy stays strong."

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